David Hudd Chairman John Foster - Managing Director Falkland - - PowerPoint PPT Presentation

David Hudd – Chairman John Foster - Managing Director

Falkland Islands Holdings plc – Interim Results – Half Year ended 30 September 2011

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Introduction to FIH

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• AIM quoted support services group comprising three market leading, cash generative businesses

– Falkland Islands Company: retail, support services and property business operating in the Falkland Islands – Portsmouth Harbour Ferry Company : Gosport to Portsmouth passenger ferry service – Momart International: specialist transport and logistics company serving fine art market

• Core trading businesses provide strong, diversified earnings base and support dividend yield

Core trading businesses provide strong, diversified earnings base and support dividend yield

• Holds 12 million shares in AIM quoted oil exploration company Falkland Oil & Gas Limited (FOGL)

– Market value of stake as at 30 September 2011 was £5.6 million (47p per FOGL share) – Deep water rig contracted for 2 wells in Q2 2012

• FOGL stake provides significant upside potential

FOGL stake provides significant upside potential

• Strategy

– Maintain organic growth and dividends through continued investment in existing businesses – Leverage assets in Falklands to maximise returns from oil exploration activity – Retain shareholding in FOGL to maximise upside potential

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FIH Interim Results 2011: Overview

• Overall Group trading performance in line with board expectations

– Underlying PBTa £1.19 million (2010: £1.15 million) +3.8% – Diluted EPS on Underlying PBTa 9.0p per share (2010: 8.9p)

• Maintained Interim Dividend 4.0p per share (2010: 4.0p)
• Strong Balance Sheet

– Bank debt and HP reduced to £3.7 million (March 2011: £4.2 million) – Cash on hand £2.4 million (March 2011: £2.1 million) – £5 million, 50 year lease secured on new Gosport pontoon

• Upgraded 400mbbl Rockhopper oil discovery will be transformational for Falklands

economy when developed

• Falkland Oil & Gas (FOGL)

– FIH’s holding of 12 million shares (5.8% ) post April 2011 fundraising

• Leiv Eiriksson deep water rig expected in Falklands waters in late January 2012
• Upside potential from giant Loligo prospect (4.7 bn boe)

PBTa – profit before taxation and amortisation

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FIH: Summary P&L - 6 months ended 30 September 2011

6 months ended 30 September 2011 £000 2010 £000 Change +/- Turnover 16,510 14,348 +15.1% Trading Profit 1,346 1,273 +5.7% Pension scheme financing costs etc (65) (72) Pontoon lease interest Net Bank / HP interest (75) (18)

• (56)

Net financing costs (158) (128) +7.3% Underlying Pre Tax Profit (PBTa) 1,188 1,145 +3.8% Amortisation of Intangibles (198) (198)

• Profit Before Tax

990 947 +4.5%

Diluted EPS (PBTa basis) 9.0p 8.9p +1.1%

PBTa – profit before taxation and amortisation

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FIH: Segmental Analysis - 6 months ended 30 September 2011

6 Months ended 30 September 2011 £000 2010 £000 Change +/- Turnover FIC 6,989 6,492 +7.6% PHFC 2,148 2,030 +5.8% Momart International 7,373 5,826 +26.5% Total Turnover 16,510 14,348 +15.1% Pre Tax Profit FIC 515 551

• 6.5%

PHFC 385 383 +0.5% Momart International 288 211 +36.5% Underlying Pre Tax Profit (PBTa) 1,188 1,145 +3.8%

Falkland Islands Company (FIC): Overview

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• Established in 1852 by Royal Charter
• Retail
• 60%

market share from five outlets

• Motor
• Land Rover and Ford sales and rentals
• Support Services
• Shipping services ex UK & stevedoring on MoD

vessels

• Agency Services: for international squid &

fishing fleets

• Insurance Broking: sole local provider
• Penguin Travel: tours for cruise ship

passengers

• Property
• Portfolio of residential and commercial

properties – valued at £1.5m over nbv

• Land bank of 70 acres in Stanley, 600 acres
• utside urban area
• Marmont Row – Sea front heritage properties

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FIC: 6 months ended 30 September 2011

• Satisfactory performance consolidating growth seen in prior year

– Sales ahead by 7.7% to £6.99m boosted by demand for support services – PBTa down slightly at £0.51m vs £0.55m in H1 2010

• Retail sales down 1.6%

at £4.3m - Demand subdued vs H12010 – Squeeze on household budgets – cost inflation 7-9% and increased competition – West Store boosted by Peacocks +4.2% (-1.8% ex Peacocks) – Homecare DIY & Building Supplies - sales down 16%

• Automotive – Ahead by 6%
• New vehicles sales up (19 vs 18)
• Fishing Agency – Better illex squid catch, £0.1million contribution
• Marmont Row – 1 house sale in H1 (£28k profit) , 8 out of 9 remaining units let out
• Property rental income - up 74k to £178k – yield on nbv = 15.5%
• Darwin Shipping –

3rd party freight revenues + £0.2million to £0.5million

• Insurance and Port services – continued growth
• Rockhopper SeaLion discovery underpins excellent medium term growth prospects

Portsmouth Harbour Ferry Company (PHFC): Overview

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• Ferry service for foot, cycle & motor cycle

passengers

• Acquired in December 2004
• 5 minute journey across mouth of harbour

from Gosport to Portsmouth (1/3 mile)

• Operates 364 days a year, 5.30am -

Midnight

• 4 purpose built vessels (2 fully

depreciated)

• 3.4 million passenger journeys p.a.
• Strong competitive position

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PHFC: 6 months ended 30 September 2011

• Satisfactory performance

– Revenues ahead by 5.8% at £2.15 million – PBTa after overhead allocation unchanged at £0.39 million

• New £5m pontoon installed 27 June 2011 - 50 year lease agreed with Council
• Passenger numbers down 4.1%
• n prior year in line with expectations

– Weekend discretionary travel most affected (-9% )

• Fare rises of 17.5%

in June 2011 to offset increased costs from new pontoon

– Adult daily return now £2.70 (£2.40), Child /Senior £1.80 (£1.60)

• Costs tightly controlled – despite rising fuel prices
• Ferry reliability 99.9%
• Steady underlying performance from stable business

Momart International: Overview

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• Specialist transport & logistics company

serving fine art market in the UK &

• verseas
• Market leading position with excellent

reputation; high barriers to entry

• 3 business streams
• Museum Exhibitions – consulting, planning,

packing, transport and installation

• Commercial Galleries – logistics services for

galleries and artists

• Storage – 70,000 sq ft of secure warehousing

for client storage

• Notable exhibitions
• Cult of Beauty (V&A)
• Richter (Tate Modern)
• Post Modernism (V&A)
• Magritte (Tate Liverpool)
• Maddox Brown (Manchester Art Gallery)

Clients

Antony Gormley

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Momart International: 6 months ended 30 September 2011

• PBTa £0.29 million up 36.5%

vs H12010

• Recovery in Exhibition volumes

– revenue + 30% to £3.4 million – Gross Margins squeezed by 3.8% – 13% increase in divisional contribution

• Gallery Services

– revenue +28% to £3.2 million – Large international contract £0.9 million – 18% increase in divisional contribution

• Storage revenues ahead by 7%

to £0.78 million

• Total revenue increased to £7.4 million (+26%

) vs H1 2010

• Commercial art market remains buoyant – successful Basel & Frieze London art fairs
• Reorganised management team – 2 vendor directors + new FD
• New ERP system being built to streamline administration and improve MIS
• Encouraging performance after contraction in H1 2010

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All figs £’000’s 30 Sept 2011 31 March 2011 30 Sept 2010 Tangible Fixed Assets

12,839 7,489 7,281

Investment properties at cost *

1,464 1,721 1,759

Goodwill & Intangibles

12,913 13,111 13,311

Quoted investments at m.v

5,641 10,710 14,940

Deferred Tax & other assets

692 634 701

Total non current assets

33,549 33,665 37,992

Working Capital - Net

3,217 3,148 3,466

Cash

2,376 2,062 2,288

Corporation tax payable

(666) (569) (622)

Bank Loans etc due within 1 year

(1,116) (1,058) (1,076)

Dividend payable

(507)

• (459)

Net Current Assets

3,304 3,583 3,597

Bank Loans etc due after 1 year

(2,555) (3,104) (3,521)

Finance Lease re Pontoon

(5,000)

Pension Provisions & Def. Tax

(3,547) (3,543) (3,848)

Equity Shareholders funds

25,751 30,601 34,220

Net Assets per share £2.79 £3.32 £3.71 * Market value of investment & rental properties £4m+

FIH: Balance Sheet

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FIH: Net borrowings and liquidity

30 Sept 2011 £000 31 March 2011 £000 30 Sept 2010 £000

Bank Loans & HP due within 1 year (1,118) (1,058) 1,076 Bank loans due after 1 year (2,555) (3,104) 3,521 Total Bank Borrowings & HP (3,673) (4,162) (4,597) Cash 2,378 2,062 2,288 Net Bank Borrowings) (1,295) (2,100) (2,309) Decrease in net bank borrowings & HP 805 209 Long term finance lease re Pontoon (5,000)

• Total Net Borrowings

(6,295) (2,100) (2,309) Net Tangible Assets 12,838 17,490 20,909 Capital Gearing – Net 49.0% 12.0% 11.0%

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FIH: Cash flow

6 months ended 30 September 2011 £000 2010 £000

Operating profit 1,148 1,075 Depreciation 507 437 Amortisation of Intangibles 198 198 Provision for share based payments 95 111 Increase in working capital 72 (1,847) Net Cash Flow from Operations (incl property sales) 2,020 (26) Net finance interest received / (paid) (212) (82) Tax paid (260) (376) Dividends paid

• Capital expenditure

(5,600) (217) Pontoon Lease 5,000 Other (143) (145) Net Cash Flow 805 (846) Decrease in Bank Borrowings and HP 491 676 Increase / (Decr.) in Cash 314 (1,522) Decrease in Net Bank Borrowings & HP 805 (846)

FOGL: Licences and Prospects

• FIH retains 12 million

shares in FOGL (5.8% stake )

• Current share price:

49p

• Cost: 16p per share
• Loligo (in North) is

largest prospect with estimated 4.7bn barrel potential and will be drilled first

• Choice of second well

from Loligo II, Nimrod, Vinson or Scotia

• Depending on results
• f Loligo

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FOGL: Drilling Timetable

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FOGL: Summary

• A proven working petroleum system
• One of the most attractive fiscal regimes in the world (9%

royalty)

• No technical or logistical barriers to oil development and production
• Strong commercial case even if Loligo is a gas discovery – attractive

economics

• Significant upside potential from FIH’s 12million shareholding
• Knock on benefits to FIC in event of FOGL (or Borders) discovery

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FIH: Outlook

• FIC

– Oil boost maintained in H2 –but no major stimulus vs H2 2010 – H2 expected to benefit from expansion of West Store at MPC military base – Further growth projected from tourist income from cruise ships – Oil production now 85% probable - FIC’s Medium / Long term prospects excellent

• PHFC

– Fares increased to offset increased pontoon costs – Strongly cash generative/ costs tightly controlled – Future secured with long term lease on new pontoon

• Momart

– Exhibitions business stabilised – Commercial art market still buoyant and growing – Focus on international partnerships & increasing internal efficiencies

• Overall

– Spread of trading interests underpins Group’s financial stability – FOGL stake offers significant near term potential – FIC well placed to take full advantage of oil production in Falklands

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Falkland Islands Holdings plc